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Summary all articles Marketing and Innovation
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Summary of all articles in the Marketing and Innovation course (Radboud university).
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Samenvatting artikelen Marketing & InnovationArticle 1: Unraveling the process of creative destruction: complementary assets and incumbent
survival in the typesetter industry (Tripsas, 1997)
Why do incumbents’ firms sometimes fail drastically in the face of radical technological change, yet
other times survive? Tripsas analyzed the technological and competitive history of the typesetter
industry. During 100 years, the industry has undergone three waves of creative destruction where
competence destroying, and architectural technological change transformed the industry.
In literature there are two contrasting perspectives on the process of creative destruction:
1. It is an ongoing cycle of relatively fluid industries where new entrants innovate with
technologically superior products and displace incumbent firms.
2. Established firms have advantages over new entrants, because they possess critical
specialized complementary assets.
This paper uses both perspectives by breaking out three crucial factors that together influence
the ultimate commercial performance and successfulness of incumbents and new entrants:
1. Investment in developing the new technology:
When innovation is radical (it replaces the old technology) incumbents are less likely to invest
than new entrants. When innovation is incremental (it competes with the existing
technology) incumbents have greater incentives than new entrants to invest. Resource
allocation in established firms is guided by the needs of existing customers and radical new
technologies are disrupting in that they target emerging markets.
2. Technical capabilities:
Established firms have routines and procedures that enable them to efficiently process
information within the context of the existing technology regime (incremental period). Years
of incremental innovation may result in selection-induced inertia, as only firms with stable
structures and activities survive, such firms find change difficult. Incumbents have the
resources and ability to develop new capabilities (dynamic capabilities: the capacity to renew
and adapt core competencies over time). These conflicting perspectives lead to no clear
prediction whether incumbents have inferior technological performance.
3. The ability to appropriate the benefits of technological innovation through specialized
complementary assets:
Large established firms are in a stronger position to exploit innovation. Types of
complementary assets: generic (multiple applications and can be easily contracted for),
specialized and cospecialized (only useful in the context of a given innovation). Large firms
are more likely possess the relevant specialized and cospecialized assets within their
boundaries at the time of a new product introduction. But when technological innovation
causes a shift in the value network, then incumbents are at disadvantage.
The expected outcome in terms of ultimate commercial performance in the face of radical
technological change depends upon the balance and interaction among these three factors. For
example, when incumbents don’t invest in new technology, new entrants that do invest dominate the
market. Or, when neither incumbents nor new entrants already possess specialized complementary
assets, then it’s unclear which firms will dominate. If a firm invest and have superior technology,
dominance relies on the value of their complementary assets.
The typesetter industry experienced three waves of radical competence-destroying technological
change with enough competitors. Typesetting is the process of arranging text as input to the printing
process. Typesetter machines perform three functions: text input, text formatting, and text output.
,Three generations of radical technological change since the initial invention of mechanical hot metal
typesetter technology in 1886: analog phototypesetter (1949), digital CRT photosetting (1965) and
laser imagesetting (1976). These provided an incentive for incumbents to invest.
- The effect of each generation on investment incentives was incremental in economic sense.
The old generation of technology continued to compete with the new generation. Entrants
were therefore not able to monopoly price. The price/performance did improve over time
resulting in eventual substitution for the old technology.
- The effect of each generation on technological competence. Two measures: (1) changes in
the required skills for a product development team were compared for each generation
(measure fails to capture any sense of architectural change in the product) and (2) product
components, interfaces and overall machine logic were compared to gain better
understanding of architectural change. All three generations were competence-destroying.
The counts for both changes in development team skill base and architectural changes.
- The effect of each generation on specialized complementary assets . Three complementary
assets in the typesetter industry: specialized manufacturing capability, a sales and service
network, and a front library. Only a good font library was resistant to the three technological
changes and provided the company a competitive advantage. Specialized manufacturing
capability became generic, because it could be easily contracted for. The value of sales and
service network decreased and new market segments emerged (in-house publishers).
Creative destruction in the typesetter industry:
- Investment behavior of new entrants and incumbents : almost every firm presence in a
typesetter generation invested in developing a machine for the following generations.
Incumbents invested earlier than new entrants.
- Technical performance of incumbents versus new entrants: incumbents based their
development of new generations’ machines on their established, efficient routines in the
architecture of the prior generation, but were slower than those of new entrants. There’s
limited evidence that incumbents did not catch up technologically with new entrants.
- Appropriability and specialized complementary assets: when an incumbent’s technological
competence is destroyed, but still controls valuable specialized complementary assets, it
should be able to protect its competitive position. Similarly, new entrants that possess
specialized complementary assets should have an advantage over those that don’t.
Tripsas examines the technological and competitive history of the typesetter industry. This industry
has undergone three waves of creative destruction, where competence destroying technological
change has shaken the industry. The incumbents firms’ innovations, despite timely investments, are
handicapped by their previous business and that new firms in the market introduce innovations
which are superior to those of established firms. But, they did not necessarily suffer commercial
consequences as a result of their inferior technological positions. Important to consider multiple
perspectives when examining the competitive implications of technological change.
Article 2: Customer orientation and future market focus in NSD (Hillebrand et al., 2011)
Purpose of this study is to investigate the differential effect of customer orientation and future
market focus on organization inertia and firm innovativeness in the context of business-to-business
small and medium-sized enterprises (SMEs) involved in new service development.
Inertia: a firm’s reluctance to change, it is the firm’s lack of willingness to cannibalize sales, routines
and prior investments, which has been shown to be an important determinant of firm innovativeness.
Firm innovativeness: degree to which a firm develops regularly innovative new products and services.
This study contributes to the literature in three ways:
1. It adds to a debate on being market-led or driving the market.
2. It adds to the research of service innovation literature.
3. It adds to the literature of customer and market orientation of SMEs.
,Customer orientation: the degree to which a firm believes it should try to understand and satisfy
current customers’ needs and improving their offerings. It benefits a firm’s development, helps to
increase perceived product quality and raises customer loyalty. When firms pay too much attention to
existing customers, they may only serve their existing market (= the tyranny of the served market).
This can limit their ability to adapt to new trends and technologies and can lead to a shift towards
improved solutions rather than radical innovation that may create new markets (=unbalanced focus
on keeping the status quo as compared to proactively shaping customer or markets) firms need to
balance its focus between current customer needs (customer orientation) and anticipating future
market developments (future market focus). Future market focus: a firm’s predisposition of openness
to new market trends and business models and stimulates a firm to move forward. Customer
orientation is expected to increase inertia by endorsing existing customer beliefs and future market
focus will decrease it by introducing influx from customers.
There are two mechanisms that influence firm innovativeness:
- Service R&D strength: the level to which the service firm has resources and capacity for new
service technology development compared to its competitors.
- Willingness to cannibalize: three dimensions of inertia to a reluctance to cannibalize (1) sales
of current services, (2) current organizational routines and (3) prior investments.
This is the baseline model of innovation. Customer orientation and future market focus are added as
the main constructs of interest. The following hypotheses are formulated:
H1a: Customer orientation negatively influences willingness to cannibalize current sales true
H1b: Customer orientation negatively influences willingness to cannibalize existing routines not
true
H1c: Customer orientation negatively influences willingness to cannibalize prior investments true
H2a: Future market focus positively influences willingness to cannibalize current sales true
H2b: Future market focus positively influences willingness to cannibalize existing routines true
H2c: Future market focus positively influences willingness to cannibalize prior investments true
Strong customer orientation may hinder the development of radical innovations. However, customer
orientation doesn’t affect willingness to change established routines, because they are less reluctant
to change routines when it doesn’t affect current customer’s way of working. Changes in the routines
may actually help the firm to accommodate current customers, making them less reluctant to
cannibalize routines than we anticipated. Future market focus has positive impact on reducing inertia
and driving market development. SMEs should strike a balance between focusing on current
customers for incremental improvements and looking towards future markets for radical innovations.
This study suggests that managers planning to improve their organizations’ abilities to develop radical
innovations should focus both on serving current customers and building future market focus, which
stimulates sensitivity to detect and react to new customers needs and emerging technology trends.
Limitations and further research:
- Cross-sectional design limits causality inferences, so longitudinal data is recommended.
, - CEO evaluations, although reliable, as single respondent data may impact results, future
studies should incorporate multiple informants and behavioral data.
- The model used is relatively simple, future research should explore more extensive models to
encompass all factors influencing innovation outcomes.
- Limited sample size hindered full exploration of combinations of customer orientation and
future market focus, such exploration, especially in ambidextrous firms, is encouraged.
- The study's generalizability could be enhanced by extending research to other countries and
specific service industries rather than pooling data from various service industries.
- Development of tools for monitoring inertia recommended for future research, building on
recent concepts related to monitoring function and dynamic capabilities.
Article 3: The influence of acceptance and adoption drivers on smart home usage (Hubert et al.,
2019)
This article explores the acceptance and adoption process of smart home technologies. Three major
theories that are used to develop a comprehensive adoption model:
1. Technology Acceptance Model (TAM): suggest that perceived usefulness (PU) of technology
and ease of technology use (PEOU) are the key drivers to predict technology acceptance.
While these factors focus on the evaluation of the individuals’ perceived utility and effort of
using the technology, they do not consider other factors.
2. Innovation Diffusion Theory (IDT): covers antecedents not being addressed in TAM. It explains
the diffusion process of innovation, considering factors solely focusing on technology-related
determinants. The rate of diffusion is determined by the rate of adoption (the relative speed
of use by members of the social system). The rate of adoption is influenced by five attributes,
which are relevant from a potential user’s perspective: relative advantage, complexity,
compatibility (CO), trialability (TRI) and observability of the innovation. Observability contains
two dimensions including visibility of the innovation and perceived result demonstrability.
3. Perceived Risk Theory (PRT): emphasizes role of perceived risk (PR) in inhibiting technology
adoption, particularly in situations involving uncertainty and discomfort. PR is potential loss
associated with adoption of technical innovation and is an inhibitor to the adoption decision.
It is often not possible to explain adoption of technologies based on one approach. Existing research
often overlooks the interdependencies between TAM, IDT, and PRT constructs. The study proposes a
holistic approach by combining this to understand user acceptance. It recognizes challenges posed by
smart home applications, like privacy and security concerns, and calls for comprehensive frameworks
that consider both positive and negative factors influencing adoption decisions.
These theories have been chosen for two reasons:
- TAM is most often used, its predictors are crucial for acceptance of many technologies. IDT is
also a major innovation theory which can explain technology adoption well. Both theories
state that adoption of a particular technology is determined by its perceived attributes.
Combining TAM and IDT leads to the development of a holistic model that explains a large
percentage of variance in intention to use a technology and actual technology usage. By
combining the three theories, the investigated model captures positive and negative factors.
- Smart homes technologies are installed at the user’s homes often connected by an internal
home network. Risk perceptions may strongly influence the individual’s decision when
dealing with these technologies.
The conceptual model aims to provide a comprehensive understanding of technology acceptance in
the context of smart home applications combining TAM, IDT and PRT.
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